Letters
Using marital property agreements as primary estate planning
devices
I enjoyed the informative article, "Wisconsin:
An Estate Planning Paradise," by Andrew J. Willms and Dean T. Stange
in the February Wisconsin Lawyer. However, I must disagree with
the authors' assertion that "will substitute provisions in a marital
property agreement often are not appropriate as the primary asset
transfer document at death."
I am surprised that more Wisconsin lawyers are not using marital
property agreements with Washington Will provisions as the primary asset
transfer document in certain cases. We have a unique marital property
law in Wisconsin that permits nonprobate transfer at the time each
spouse dies. There are unlimited planning possibilities with these
agreements. I believe that part of the reason these documents are not
used as primary estate planning documents in Wisconsin is that Wisconsin
lawyers are reluctant to do something not being done in other
states.
I agree that marital property agreements as primary estate planning
devices are not for everyone. However, I have done dozens of such estate
plans for standard "husband and wife with children" situations involving
smaller estates. They have proved easy to use and have been well
received by my clients.
These agreements have many advantages over traditional trusts. No
trust funding is necessary. You never have to worry about probating an
asset that was not put into the trust. With proper language, flexibility
is maintained for the surviving spouse. The documents are easy for the
clients to understand. They fulfill the two most often stated requests
made by my clients: "We want something simple" and, "We are not
interested in a trust."
The authors stated two reasons for their position. The inability to
do postmortem tax planning is not an issue if use of Washington Will
provisions is restricted to estates with no death tax exposure. The
average estate that I handle does not have federal death tax concerns.
As to the need for mutual consent by spouses to revoke such agreements,
the authors acknowledge that proper language will permit unilateral
revocation before death of the first spouse and unilateral amendment or
revocation by the surviving spouse. The ability to amend these
agreements after the death of the first spouse, while still maintaining
the nonprobate features of the law, actually affords great planning
opportunities and provides the flexibility estate planners often
seek.
James J. Winiarski
Milwaukee
In appropriate circumstances, a marital property agreement can be
an attractive alternative to a will or trust for the disposition of
assets after death. However, I believe in most circumstances a marital
property agreement should augment, rather than replace, a revocable
living trust. Potential drawbacks to using a marital property agreement
as the primary asset transfer document at death include:
- The marital property agreement offers little opportunity for
transfer tax planning.
- The marital property agreement may not be effective at
transferring property located outside of Wisconsin.
- The marital property agreement cannot designate someone to
oversee the division, distribution, and management of assets after the
spouse's death. This can be a particularly important issue upon the
death of the surviving spouse when there is more than one
beneficiary.
- The marital property agreement may be ill suited to dealing with
unanticipated events (such as a predeceased child survived by minor
children).
- A marital property agreement cannot protect the beneficiary's
inheritance from his or her own mismanagement, creditor claims, divorce,
and so on.
Notwithstanding the foregoing, I do agree with Mr. Winiarski's
suggestion that marital property agreements should be used more often as
a way to accomplish nonprobate transfers. However, I personally believe
in most instances the transfer should be to a trustee of a carefully
drafted revocable living trust, rather than directly to the intended
beneficiaries.
Andrew J. Willms
Thiensville
An expression of gratitude
I want to thank all of my friends and supporters for their
encouragement and help during our recent State Bar elections. I am very
grateful to all who appeared on my behalf or conveyed my regrets to
those groups that had asked me to speak to them when I was not able to.
On behalf of my family and myself, I also want to express our gratitude
for all of the messages of sympathy and support we received following
the illness and death of my mother in January. Finally, I congratulate
Gary Bakke on his election as president-elect and wish him all
success.
Kathleen Grant
Wausua
Wisconsin
Lawyer